rendellpresentation 120717090329-phpapp02
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Rendell CompanyBy: Abeer • Edgar • Luminita
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Presentation & Overview of the Case - Edgar
Organizational Structure - Edgar
Described Issues- Edgar
Proposed Solution - Luminita
SWOT Analysis – Current State - Luminita
SWOT Analysis – Martex System – Luminita
Case Questions & Conclusion – Abeer
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Rendell Company
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President
James Hodgkin
Controller
Fred Bevins
Divisional General
Manager
Divisional Controller
50 years in business
Corporate Office:
• Financial Accounting• Internal Auditing• Budget Analysis
Seven Divisions:
• Responsible for Manufacturing and Marketing of specific product line
• Preparation of budgets and performance reports
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The Divisional GM and his Controller were responsible for the preparation of budgets and performance reports.
The Corporate Controller thought that he was not getting frank and unbiased reports from the Divisions due to the organizational structure of the company.
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The Corporate Controller believed that Divisions were not reporting accurate information to Corporate. He thought that if Divisional Controllers reported directly to him, he would be better informed.
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Problem: Some difficulties in implementing its modern techniques
Problem: Added fat to the organization budgets
Solution: Change to Martex organizational structure
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Strengths:- Current setup is more efficient;
- Better relationship between division managers and divisional
controllers.
-The current set-up allows tactical issues to be resolved more easily.
Weaknesses:
- Biased information is provided by the division controllers to the
corporate controller.
- Hidden fats in expense budget.
- Difficulties to implement new control techniques.
Opportunities:
Martex System
Threats:
- Ability of Divisional GM to conceal financial flaws
- Lack of empowerment to Divisional controllers
Rendell Company
Current State
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Strengths:-Unbiased and objective reports on division
budgets and performance from division controllers to the corporate controller.
-Corporate controller is more confident in reports given by the division controllers
-Minimized fats in expense budget-Easier to implement new control programs
Weaknesses:
-Difficult to implement change in organizational structure
-Change may not be suitable for diversified companies
-Division managers might isolate division controllers from the management team
-Organizational change may lead to dysfunction and inefficiencies
-Change may lead to conflict between division mangers and division controllers
Opportunities:
Current System
Threats:
Outside Competition
Rendell Company
Martex System
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1. What is the organizational philosophy of Martex with respect to the controller function? What do you think of it? Should Rendell adopt this philosophy?
• Transparency of information on budget issues.
• Advantages and Disadvantages
• Rendell Company should retain its current organizational structure with additional control systems to address budget issues
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2. To whom should the divisional controllers report in the Rendell Company? Why?
•To the divisional general managers of Rendell Company.
•The current setup is more efficient
•New programs are difficult to implement and there are hidden fats in the expense budget.
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3. What should be the relationship between the corporate controller and the divisional controllers? What steps would you take to establish this relationship on a sound footing?
• Unbiased information is provided by the division controllers to the corporate controller and to easily implement new programs.
• Corporate controller is to be more confident in reports given by the divisional controller.
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4. Would you recommend any major changes in the basic responsibilities of either the corporate controller or the divisional controller?Basic responsibility of the corporate controller:
- Establish the management control system, strategic plans and budgets,
- Preparing financial statements and financial reports- Evaluate the performance per division- Developing personnel in the controller organization
Basic responsibility of the divisional controller:
- Implement the strategy setup by the corporate controller
- Evaluate the performance of the department within the division
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THANK YOU